Category: Petra Picks

Continuing with my series of powerful candlestick patterns, today we are going to be looking at the Engulfing Candlestick formation.

With my proficiency in technical analysis, I am choosing to share key points that find to be the most useful in real life trading…

I am an avid believer in technical analysis. So I am not going to waste anyone’s time with things that get too complicated to even be useful…

I base all of my trades off technicals, but at the same time… I believe in keeping it simple.

Simple yet powerful…

Sit tight and I will show you how it’s done…

Identifying the Engulfing Candle

The engulfing candlestick pattern is a two-candle reversal pattern.

The body of the second candle fully engulfs the body of the first candle…  in the opposite direction. So a red candle will be engulfed by a green candle and vice versa…

Tails don’t matter here, all we are concerned with are the bodies of the candles.

For a bullish engulfing pattern to form, the stock must gap down on the second day of the pattern, to open below the first day… it must then close above the high of the first day candle body…

If the price does not gap down, the body of the white candlestick would not have a chance to engulf the body of the previous day’s red candle.

Engulfing Candle Key Points:

1. Two candle formation
2. The second candle fully engulfs the first in the opposite direction
3. Opens below, closes above
4. Wicks don’t matter

Significance

With a bullish pattern, because the stock both opens lower than it closed on Day 1 and closes higher than it opened on Day 1, the green candlestick represents the sellers owning the morning only to have the buyers take over in a decisive manner…

The green candlestick of a bullish engulfing pattern typically closes at or near highs of the day… so you will see only a small wick if any…

Looking for strength on a reversal candle like this is key… so the stronger it closes the better.

This confirms the strength of the buyers, and a shift of momentum.

Added Significance:

1. How many candles it engulfs- the more candles the more powerful
2. Forms at support or resistance- extra significance in the turn
3. Volume- more volume signifies the interest in the move

Trading with the Engulfing Candlestick Pattern

Ultimately, traders want to know whether a bullish engulfing pattern represents a change of sentiment, and whether they should buy the stock.

Check out the chart below, here a bullish engulfing candlestick pattern forms. As you can see the white candle to the far right opens below the red candle and closes above…

So does this signify a potential trend reversal?

Let’s check out the next chart…

Clearly this engulfing candle was the beginning of a very nice trend reversal.

Couple things in this formation to take note of…

The engulfing candle was quite a bit bigger than the red candle and it also closed strong. This puts more significance on the candle strength…

Next a really great added benefit to the potential trade… this pattern formed right at a key support level.

The stock was already having trouble continuing lower here… so when the reversal pattern formed, there was that added level of protection.

So there are a couple ways people like to trade this…

If volume increases along with the price, aggressive traders may choose to buy near the end of the day of the bullish engulfing candle…

In this case they are anticipating the upward momentum to continue the following day.

While more conservative traders may wait until the following day. They want to make sure the engulfing candle closes strong…

And the next day they will be looking for more upward momentum before placing a trade. begun.

An engulfing candlestick pattern is a signal of a potentialtrend reversal… it is in no way a buy signal on it’s own, even if some traders use it like that… many have created strategies around the engulfing pattern.

But those strategies have added factors based on back testing, they aren’t just jumping in.

So it’s important to trade based on your setups and any other indicators that are part of your system…

By using candlestick patterns like the engulfing candlestick in conjunction with your trading system, you can potentially get more confirmation and up the odds in your favor…

For a setup like the one above, I would also be looking at the RSI… as you can see it is oversold and gaining support there on the chart…

You can also see the MACD is beginning to cross up there… along with all of that I would also look at a few simple moving averages for confirmation…

So as you can see candlestick formations are great tools, but should be used with other indicators as well.

Get more detailed training on my specific setups and how I use them to consistently profit in live trading.

Source: PetraPicks.com | Original Link

I am going to show you how to ride the wave today… no not an ocean wave.

I’m talking about trend trading…

… you’ve heard it before: The Trend is Your Friend

But what’s it mean?!

Think about a car in motion… even after you let off the gas, it is still moving quite fast…

So fast you actually need breaks to slow it down in a safe amount of time.

Would you want to get in front of that, trying to go the other way?

Of course not… if you are going the opposite way, watch out… however if you are going the same way… jump on and get a free ride…

This is the same in a stock that is trending… whichever way.

When the stock is in an uptrend it tends to continue going up… it takes breaks to slow it down an ultimately reverse it…

So do you want to try and trade in the opposite direction? Of course not!

If you want to make money trading stocks, trade in the direction of the trend…

But do we just buy and hold? Not exactly.

I have the tools and setups that tell me if a stock is trending, which direction and when and where to buy and sell.

The Trend is Your Friend

The easiest way to make money in the market is to trade with the trend…

So what is a trend?

Simply, it’s the direction of a stock or market’s price over a specific period… and you will generally see higher highs and higher lows in an uptrend (lower highs and lower lows in a downtrend).

If a stock is trending you can simply look at a chart and see the trend. But to help out visually… it’s always good to draw a trendline on the chart.

Check out the chart for Gamestop (GME) below… Just by looking, it’s very clear that GME is trending up….

The price is moving up from the left hand side of the chart to the right hand side… that simple to see.

Now to help with analysis, I will show you how to draw the trendline… so you can see it more clearly.

Drawing a trendline –  Going from the left to right… Start at the lowest low and draw a straight line under the lows trying to hit the major higher lows. This is an uptrend… as shown in the chart below.

That was easy right?

You can do this on any chart and now you have a good visual of the trend.

As you can see.. GME is trending up…

Now how do you make money trading with the trend?

When looking to trade, you first want to identify the trend… which we accomplished by drawing the trendline in the previous chart, where we identified an uptrend in GME.

Where an uptrend is marked by an overall increase in price, we all know a stock isn’t just going to move straight up.

It is going to stall out, pullback, go up, create some support and resistance levels, move around those some, etc.

As frustrating as that ends up being…

That is where we make our money trading with the trend.

You see a lot of people get bounced around on pullbacks but we have the tools and knowledge to make the right decisions to profit…

Let’s look at a basic entry pattern on a trend trade…

Look at the chart below.

Each previous higher high is marked with the green line and higher lows are marked with blue horizontal lines…

After making a higher high, the stock pulls back and as long as the new low is higher than the previous low… you would be looking to buy the stock as it breaks above the last high…

There are multiple trades in a trend as you can see the little blue swings up every time it breaks the previous high…

There you have the basics of a potential trend trade, buying each time it breaks a previous higher high…

But at the same time… if you are serious about trading, it is always advised to use a clear and proven system that uses more than just a simple breakout…

Here is how I mix other technicals with the trend…

In the GME chart below… I marked some of the technicals I was looking at to make a trade in this stock…

First thing you will notice is that before the uptrend we were looking at earlier… it was previously in a downtrend.

After which it made one of my favorite patterns, the Rounded Bottom Breakout (RBB).

On the chart, I point out where the 8 EMA crosses the 20 SMA and both moving averages begin to turn up…

This trade sets up nicely as the stock price closes above the 50 SMA just before the price breaks above the previous higher high… buying on the breakout.

By pairing my other indicators, patterns, and technicals with my knowledge of trends… we have the opportunity to enter in the beginning stages of the uptrends.

Giving us more profit potential as well as less risk overall…

Now that we are in on the breakout… how do we manage this for profits?

Take a look at the little blue ovals in the chart… I circled these areas to show that each time the price pulled back to the 20 SMA it bounced back up to resume the trend.

The 20 SMA is showing good support and therefore gives us a great place to trail a stop…

And the all important when to take profits…

If you look at the last time the price bounced off the 20 SMA… this was the first time it showed some weakness with a tiny break below before resuming…

It still made another higher high after that, continuing the uptrend… however, you can also see that volume is trailing off…

An early sign of buying demand drying up is when a stock is going up while volume is trending down…

It might not be over, but this is a good time to lock in some profits and tighten your stops…

So as you can see… without a doubt, the trend is your friend…

But it’s also important to use a strategy that gives you the specifics for when to get in and out and how to identify your trades etc…

If you want to learn more about how I spotted GME and how my RBB trade works… I teach it all in my live trading chat room…

I also send out a daily watch list showing the stocks forming RBB setups as well as the other setups I use…

And in my daily trading room we talk about the setups, point things out to each other, and walk through every trade I take, so everyone is on the same page.

Join Me In My Trading Room

Source: PetraPicks.com | Original Link

Trading the stock market can be stressful.

For whatever reason, when there is money on the line our body, mind and breathing patterns change.

Stock prices fluctuate all over the place, information flows at a blink of an eye, and let’s not talk about all the stuff we can’t control—the rumors, tweets, and breaking news.

When you are stressed, you are prone to making mistakes… and losing money.

Luckily for you… I have a few surefire ways to kick the stress out of your trading so you can pull in the profits.

Trading Without Stress… or close to it

First off… let’s be honest about stress…

It exists and it’s natural, it’s not going anywhere…

So this is not about denying it, but accepting it and finding ways to offset it…

Follow these 3 surefire ways to stress free trading, and keep stress from eating you and your profits…

Focus on the Controllable

The key to stress free trading is knowing what you can control and focusing on that…

You also have to be willing to admit there are things that you simply can not control… and let those go.

This allows you to avoid the stress of worrying about the uncontrollable, which it just part of the game.

So what can you control? Your trading plan.

If you want to limit stress in trading, the number one thing you can do is to have a trading plan… and stick to it.

A trading plan gives you an amount of control… the amount the market will allow, and that’s all you can ask for…

A detailed plan is important because you want to control everything you can… you should have profit targets, stops, risk/reward, etc.

Losses are inevitable… you can’t say you are never going to lose and actually have control over that… but you can control how much you lose.

Stop-losses are a crucial part of every successful trading plan. Don’t trade without it.

Create Balance

What do I mean by balance?

Listen, markets don’t stop… the news, the buzzing, the worry… it always surrounds you.

So you need to create some boundaries to ensure that trading does not come to completely dominate your life. Burnout is real.

First off, it’s important to take breaks. Staring at a computer all day watching every tick and finding the next trade or worrying over what you are in will only cause anxiety.

Just a few minutes away from the screen at regular intervals throughout the day can do wonders, and you can even plan ahead and set alarms.

Second, you need to relax both your body and mind every day.

Two great ways to accomplish this are through meditation and exercise…

Meditation provides you inner clarity that lets you take the emotion out of trading.

And it helps to establish a state of mind for becoming a profitable trader.

Exercise gives us a physical meditation per se and it is an incredibly powerful stress buster.

Exercise will help you relieve stress through the release of endorphins and will also help to clear your mind with an escape from the mental intensity…

In the end… you need balance… time where you completely disconnect from everything and relax and rebalance your mind and body…

Books, exercise, meditation, hobbies, breaks etc…  wherever you can find it.

Learn from a Mentor

This is crucial to your trading success…

You can do it alone… Maybe?!?!… Probably Not…

But you can definitely do it with the right mentor… someone who is already successful and has made all the mistakes and grown.

Trading as a hobby is one thing… hobbies don’t make money, they cost money…

So if you want to trade for a living, then you need to become a professional trader. And the top professionals in anything have mentors.

The best quarterbacks in the NFL don’t get there with the skills they learn on their own, and it’s definitely not luck…

Even the top CEOs in the world have mentors, not just to get them to where they are, but to keep them there… it’s a game changer.

So why as a professional trader would you not have a mentor?

And let me tell you this… all of the top traders do… money managers, hedge fund guys, private equity etc.

If you want to be at the top, you need someone at the top to guide you. Period.

Putting it All Together

I don’t just offer alerts, a system, and training materials… I teach and mentor my students every single day…

The goal is to teach you to find and make your own trades, become a self sufficient trader, and to guide you through that journey.

Mentorship never ends. The top athletes don’t get to that level and then decide they don’t need help anymore…

My mentorship is the same… I love seeing students take the reigns, and the best ones are always around, not just to talk to me but to help others in my live chat room as well.

Take the stress out of trading… control what you can and let the rest go… balance your life mind and body… and seek the advice of a mentor…

All of this will help you trade stress free and become as successful as possible.

Join My Trading and Mentorship Program Now

Source: PetraPicks.com | Original Link

Here’s a look at a less talked about option in trading… LEAPS.

Long-term equity anticipation securities (LEAPS) are publicly traded options contracts with expiration dates that are longer than one year. This is in contrast to traditional options, which usually expire within 6 months.

Put simply, LEAPS possess all the same characteristics as standard options, just with a longer life.

And with further out expiration dates, these options can be quite useful for both long-term investors and traders.

LEAPS vs. Short-Term Options

The primary difference between LEAPS and standard weekly and monthly options is time.

LEAPS allow for more time to be right about the direction of the stock And because there is more time for the predicted move to play out, LEAPS behave more closely to the underlying stock.

However, the added time value also makes LEAPS more expensive than shorter-term options.

For example, here’s a look at a 1-month call vs. a LEAP

The graphic above illustrates the result of the LEAP being more expensive than the short-term option…

Your potential maximum loss is greater and your break-even point will be farther away, so there is a balance between the value of the added time and the increased up front cost

LEAPS In LIEU of Stock Ownership

Since they cost less than buying the stock and tend to move in step with the price… you can capitalize on your trading decisions without tying up all your capital in the stock.

Assume you believe a stock will go up in price over the next couple of years. Instead of purchasing the stock, you might decide to buy a 2-year LEAPS option.

Here’s why:

1. Options can enhance return. LEAPS allow you to control a greater number of shares with less money.
2. The potential loss of the trade may be reduced. The maximum loss when purchasing LEAPS is the cost of the option. Whereas the max loss when buying stocks is the result of the stock going to zero.

These benefits might make LEAPS an attractive choice if you can manage risk properly.

Here’s an example of how a LEAPS call option can increase your return. Theoretical example for simplicity:

• XYZ is $50/ share. 100 shares = $5000

• LEAPS = $7 = option to control 100 shares is $700

• XYZ goes to $60/ share. 100 shares = $6000 = +20% return

• LEAPS now = $10 = $1000 for your contract = +42% return

• XYZ now goes to $65/ share. 100 shares = $6500 = +30% return

• LEAPS now = $15 = $1500 for your contract = +114% return

As you can see, the LEAPS contract returns a higher amount if you are right.

Amplify Your Return

Instead of dumping all of your capital in contracts and hoping for the best. Look at how to amplify your return without risking your whole account.

LEAPS are well suited to increase your return by putting the bulk of your money in the stock or index and using a small portion in LEAPS contracts.

• $5,000 total investment
• 72 shares of stock at $50 = $3,600 + 2 LEAPS contracts for $1,400
• At $60/ share you can see the LEAP begins to magnify your return = 26.4% vs. a stock only return of 20%. And it takes off from there.
• At $75/ share the return jumps to 108% vs. the stock only return of 50%

With this strategy you will take on a risk of $1400 should the LEAPS expire worthless. This is due to the premium you pay up front. The risk however also gives you the opportunity for a much greater gain.

By using a mixture of buying the stock in conjunction with LEAPS, you can limit the risky side of using LEAPS alone… while also receiving the benefits of increasing your gains when you are right.

HEDGING

Besides the traditional speculative options trading, LEAPS can be an effective tool for hedging. As a long term investor, you can buy LEAPS puts to hedge against a long position.

Buying puts can help you hedge against a decline in the stock or index over time. You may be long a stock that has appreciated in value, but are worried about a decline in the short term.

Of course you don’t know when it will happen, so you don’t want to sell the stock and miss any more potential appreciation in the meantime. With this in mind, you can buy LEAPS puts as a hedge against a potential price decline.

With LEAPS you don’t have to be precise with the timing of the downturn because of the long time frames it offers. Short-term options however create a need to be more precise with your timing.

The purchased put essentially locks in some of the unrealized profit, less the cost of the option.

Suppose you purchased 500 shares of XYZ at $10 per share. Several months later the stock is trading at $30 per share.

You still want to own the stock long term. However you are concerned about a decline in the next year or two. Consider LEAPS puts to lock in the gains.

This could be done, for instance, by purchasing 5 XYZ on year 30 strike price LEAPS at 3.6 for a total of $1800 (3.6 x 100 = 360 per contract x 5 contracts =$1800).

If the stock were to rise to $50, the put would expire worthless, resulting in a loss on the LEAPS contracts of $1,800 (the cost of the option). The total profit however would be $18,200 ($10,000 from the price increase – the $1,800 option premium).

If the stock had gone down to $20, you would be able to sell at $30 for a profit of $8,200 ($10,000 from the sale at $30 – $1,800 premium). Whereas if you didn’t have the LEAPS contracts, you would be selling at $20 for a profit of $5,000.

The $1800 premium let you lock in profit at the same time as allowing you to continue to profit from increases in the stock price. And protect you from a major sell off.

If you want to learn more about trading and how to profit in different environments… I offer personalized training to get you where you want to be…

JOIN NOW

Source: PetraPicks.com | Original Link

Little bit of up, Little bit of down… Little gap here, Big gap there…

Probably not the best trading conditions, right?

So what’s all this chop mean for us going forward?

While I don’t have a crystal ball, here are my thoughts:

One—more chop in the market can mean more time on the sidelines.

Not taking the wrong trade is just as important to your capital growth as taking the right trade.

Preserving capital is key when times are tough… but it doesn’t mean there are no trades… it just means you have to be more selective.

Two—you can adjust to a trading style that works well in a choppy market.

Want to know how I plan to tackle the rest of October, and how you can come out on winning, despite all the chop…

Making Money in a Choppy Market

Look at the blue rectangles in the chart of the SPY below.

Can you tell the difference? Other than the first one is August and the second one is October, they look a lot alike…

Basically just a bunch of nonsense… and that’s due to what’s happening in the world… nonsense from politics, trade wars, global economy, economic growth, economic stimulus…

With so many balls in the air, no one knows what the future holds… and there is nothing investors hate more than uncertainty…

Hence the market “chop suey” – a little of this and that in the chart of the SPY –

So what steps can you take to survive and profit right now?

First decide if it makes sense to trade at all. If your system simply doesn’t work in choppy markets, not trading is the correct trading decision.

Now if you do decide to trade, another thing that can help is to change your expectations. In a more clearly trending market, you may have been able to pull profits from big swings in your trades.

But in this wildly choppy market you may need to reign in your profit targets, so don’t get greedy here… small consistent gains will equal big profits in a choppy market.

The second step you can take is to look at different strategies to make money in this type of market…

Support and resistance are your best friends right now.

Buy at Support and Sell at Resistance… Play the range.

When stocks are choppy, they aren’t able to get the supply or demand needed at critical levels to push the price through and break out.

This can be money in your pocket if you trade it right… look to buy at the support levels and sell at resistance.

There can be a lot of profits in this strategy, you just have to keep your stops in line so you don’t get caught when the stock finally decides to break out again.

The SPY chart here shows the support and resistance areas in play during the month of August. You can see a “play the range” strategy definitely had some merit that month.

Another great tool for a choppy market is an oscillating indicator like the relative strength index (RSI). When stocks are in choppy markets, traders tend to pay more attention to the oscillating indicators like RSI…

The RSI creates an indication of when a stock is deemed to be overbought or oversold… thus providing buy and sell triggers based on price movement.

Many studies have shown that oscillators perform best during choppy markets, due to the fact if a stock is trending, a stock can stay overbought or oversold for long periods of time.

In the choppy market, the stock price will roll between those extremes more cleanly, as seen in the chart for Gilead Sciences (GILD) below.

And why just play the range when you can add an indicator like the RSI for added confirmation?

In the GILD chart below, you can easily see the oversold and overbought conditions on the RSI match up with the Support and Resistance levels quite cleanly… giving you added confirmations on when to buy and sell in the range.

So while October may be looking a lot like August so far… all is not lost when you are in control of your trading decisions…

Sit on the sidelines while the market looks for clarity, or simply change it up a little with smaller profit targets… or change it up a lot with a play the range strategy, and make money in the chop.

The only bad decision is to trade a system you know won’t perform well in this market. Get more more guidance on how to trade and just as importantly when to trade…

JOIN NOW

Source: PetraPicks.com | Original Link

You can call it grit, moxie, spunk, tenacity, or just good old determination. But whatever you call it, a strong mindset is a necessary trait if you want longevity as a trader.

If we lack confidence or are pessimistic—it will reflect in our performance.

However, a powerful mind builds a mental fortress…

Did you know Michael Jordan was actually cut from the varsity basketball team in his sophomore year?

He simply wasn’t good enough.

Imagine if he gave up after that?

However, rejection didn’t knock him out of the game. He used it as motivation and it allowed him to build a mental fortress.

M.J. was able to achieve his goals by focusing on them, one at a time.

He practiced harder, played with intent and had a plan to become the best version of himself.

Now, if you want to be the best version of yourself then you can’t neglect the mental game and how it impacts trading.

I’ve put together some all-important strategies that are certain to get your mind primed and operating at its highest capacity.

Mind Games

A strong mindset is what allows you to stay focused on your intentions, instead of negative thoughts.

It’s what helps you understand that struggle is impermanent and won’t derail your success… and keeps you from making self-destructive decisions.

So how do you cultivate a mindset that breeds success, just like the top Wall Street traders?

You learn from them… here are the top things that successful traders do to build a mental fortress for success…

The Power of Intention

Intention is a determination to act or accomplish something… this is a mindset that produces an insatiable belief in success.

Successful traders use the power of intention to build belief systems around the things they want to create or experience. Then they make them real.

To tap into this power, they use mantras that help build a mindset of success.

In a simplistic description, a mantra is basically a word or phrase you repeat over and over again, letting it sink in and take hold…

When you create and practice a mantra-based desire to become a consistent and profitable trader, you are harnessing the power of that intention…

It begins to flow through you and you naturally achieve it…

Quiet the negative thoughts

The best traders are aware of the negative thoughts but don’t get derailed by them… they are able to detach from the negative and replace them with positive thoughts.

If you have a negative thought come up… acknowledge it and then reverse it…

Let’s say you start to think: “I am never going to make it as a trader” … acknowledge it, and flip it…

Now repeat to yourself – “I am going to make it as a trader” – over and over… do it until that’s what you believe and feel inside…

Make this a practice and you will crush any power the negative thoughts may have had…

Practice Meditation

Meditation is a common theme among top performers in all walks of life.

It helps you become more awake and more purposeful about your actions. As well as, become more aware of your thoughts and emotions so you can respond, rather than react, to situations in your trading…

Practicing meditation will help you get to know yourself on a deeper level while also lowering your baseline of stress and anxiety.

It can and will help you build a powerful mental state that will take your trading to another level… as well as benefit you in all areas of your life.

Become Disciplined

Create a routine that becomes second nature, automatic, every day…

Top traders have a mindset that no matter what, they will follow the plan… take profits, cut losses, enter on point etc… No matter what.

And they do not argue with the plan…

Every trade matters, there isn’t one that’s less important than another. When you create rules that work…  you cannot question them.

Successful traders know their system. They have defined the trades that work.

And they stick to those trades… they don’t trade on a whim… they trade their edge.

The Mind-Body Connection

We all know that exercise is good for us, yet how many of you actually do it regularly?

If you don’t, you are missing out on the huge benefit of the connection between a healthy mind and body…

As you know trading can load you with stress and when your mind and body are strong and healthy, it becomes much more manageable.

Find time to disconnect from work-related stress that can make it difficult to adopt a success-oriented mindset. Get outside, stimulate your body and mind through exercise, fresh air, sunshine, etc.

Grow from Mentorship and your Environment

And the best for last…

Mentorship is often discussed with regard to self-improvement and trading success…

The most successful traders have mentors or hire coaches to help them stay focused, remain accountable, and hone their craft. They know this is a key ingredient to push their trading to the next level.

And along the same lines, your environment also plays a significant role in creating a healthy mindset. After all, we’re social creatures and are influenced by those around us.

Surround yourself with profitable, hard-working traders who can teach you new things and encourage you, and you will thrive.

And that is exactly what I have created with my members… I teach and mentor my students and take pride in their success… and I have developed a community of members all striving for the same thing…

My members don’t just follow me into trades… they also ask questions and learn and share with each other… everyone is growing and winning as a team…

If you not only want to learn to trade, but also want to build the right mindset to be successful, you need a successful mentor and be a part of a supportive trading team.

JOIN NOW

Source: PetraPicks.com | Original Link

Here we go… two days into the month of October, and two days of big market losses to start the month off with a bang…

What happened?

Take your pick… to start the month off, on Oct. 1 manufacturing numbers came out weak and the very next day job growth numbers disappointed as well… both possibly pointing towards a slowing economy…

Impeachment talk is heating up as we head towards an election year…

But that’s not all… still lurking in the shadows are the trade war worries… a slowing global economy, and in case you forgot… yes, we still have an inverted yield curve.

Two days into October and all 3 indexes are below where they were 12 months ago.

And with the payrolls report on Friday… things could get a bit hairy…

So how do you survive when the market turns on you?

In comes the importance of stops… I am going to show you how to use them to survive times like these… keeping you in the game so you can continue to pull in profits from the market…

Market Survival 101: Always Use Stops

At times like these, you need to get serious about protecting your hard-earned gains.

Listen… there is money to be made no matter which way the market goes… but part an ever so important part of making money is keeping it…

So with the market currently uncertain… you need to be able to survive and one of the most crucial elements in survival… in any market really… is using stops properly.

First off, what is a stop?

Well as with any trade you need a plan… and an important and often overlooked part of that plan is knowing when you will exit a trade when it goes against you…

So many people take trades with a clear target, but lack the foresight to have a plan to limit losses if the trade goes south…

A stop is a crucial part of that plan. This is the point at which you will exit a trade to limit your losses…

Often referred to as a stop-loss order that will automatically trigger when the stock hits that price…

When referring to a stop… it can be an order that is placed ahead of time… or for the very active day trader, it can simply be knowing the price to jump out in order to limit losses…

In trading terms, it is often just referred to as a stop for short… the key is to simply have a predetermined exit to cut losses…

As a practical example, look at the chart of GOOS.TO below…

GOOS.TO sets up with one of my favorite patterns, the Rounded Bottom Breakout (RBB).

The stock quickly goes up to test resistance, giving me the opportunity to scale out of some in order to lock in profits… another key in an uncertain market… take profits while they exist…

Next, the stock pulls back and creates support around my buy area. Once it tests this area twice and makes a move up, I am able to move my stop up…

What’s the value in this?

Well, this is the whole point of the story… having a stop keeps you from getting crushed when the trade goes against you…

And moving your stop up when an opportunity presents itself helps you to reign in losses even more… as well as lock in profits as the trade moves in your direction.

This is how you survive an uncertain market… your survival lies in having stops in place…

Look at where the stock traded by the end of the day I stopped out… and look where it went the very next day…

I actually ended up positive on the trade even though the market crushed it the last two days… if I had not stopped out, I would have taken a big hit…

If you follow the markets at all, then you know what happened those two days…

The market puked… as evident in the chart below…

And my stop is what kept me alive… and profitable… all while the market puked.

So if you want to stay alive while the world is lost… don’t take a trade without knowing your loss limits and having stops in place…

When I trade, I not only look to my patterns and indicators to get me into profitable trades… I also have a detailed plan with stops calculated before I even enter a trade.

I lock in profits along the way and continue to profit no matter what the market is doing.

If you are ready to trade with certainty in uncertain times… my simple patterns, indicators, trading plans, along with live personal mentorship will give you the confidence to get you there.

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Source: PetraPicks.com | Original Link

Odds are when you think of Canada your mind goes to extreme politeness, hockey, snow, and maple syrup.

However, Canada is actually bursting with potential…

And when it comes to Canada… buying foreign stocks does not have to be a foreign experience.

A good way to protect your investment capital is to make sure your portfolio is, you guessed it, diversified.

This goes beyond the usual mix of owning stocks, bonds, and real estate…

With the U.S. mired in political turmoil, investing outside of the borders can add a new wrinkle to your portfolio.

Just as you would not pour all of your money into one stock…why put your whole portfolio into one country?

While there are many different stock exchanges outside of the U.S., being that I live in Canada and trade here every day… I want to share my knowledge about the potential here.

Canada is known for its burgeoning marijuana industry… with huge long term potential…  unlike the U.S., the marijuana industry is federally legal in Canada…

So how can you take advantage of this potential diversification?

Adding to Your Arsenal with Canadian Stocks

Canada is known for its cannabis production and medical marijuana innovation. Quite simply, these companies provide the next frontier for healthcare and recreational fun.

And while many of these companies are not available to trade in the U.S. The goal here is to get in on this green goldmine before they explode…

But does Canada provide a safe investment environment?

Believe it or not, Canada is one of the wealthiest nations in the world.

While you may see Canada as a sweet and unassuming neighbor… it is becoming a financial giant with major gross domestic product of over 1.8 trillion USD… giving it the 10th largest economy in the world.

And while the Canadian economy is closely tied to the U.S., it has its own unique potential for diversification…

Canada has a broad range of natural resources, with the fourth-highest total estimated value of natural resources, and being one of only a few developed nations that is a net exporter of energy… it has been labeled an “energy superpower.”

And with the 9th largest stock exchange on the globe, the Toronto Stock Exchange (TSX), Canada provides us with many companies for investment that we simply don’t have access to in the U.S.

How to Invest in and Trade Canadian Stocks?

By now you should be interested in the potential… but you are no doubt wondering how to trade and invest up north…

Well, it can be as simple as the NYSE…

There are plenty of Canadian stocks listed on the New York Stock Exchange.

Examples being the top banks in Canada, like Bank of Montreal and the Royal Bank of Canada, both listed on the NYSE as well as the Toronto Stock Exchange…

And as far as investing in Canada as a whole, the big Canadian banks are a great way to go…

But what about companies not listed on the NYSE?

A little more complicated, but not that difficult…

You simply need to make sure your broker has access to the exchange… and as with any broker, research all related fees…

Canada can offer you many opportunities that you simply cannot get by just investing in U.S. stocks. With their natural resources and marijuana industry bursting from the seams, there are many options to enhance your portfolio.

Parkland Fuels (TSX:PKI) –

Canada’s largest and one of North America’s fastest independent marketers of fuel and petroleum products. The company’s growth is primarily driven through acquisitions. The company is a Canadian Dividend powerhouse, having raised dividends for 6 straight years.

With analysts expecting 20% growth over the next year and a growing, stable dividend this is one of the premier Canadian stocks to watch.

Pinnacle Renewables (PL) –

Positioned with a unique spot in the renewable energy sector, the company provides wood pellets, which are used by thermal power generators to produce renewable power.

Pinnacle Renewables operates in an industry that is in the very early stages of its life cycle. There are some significant risks of course… being that the product is in its infancy stages, and as such technological advancements could make it obsolete.

However, the demand for the company’s pellets is expected to double in the next couple of years, and the company has added over $2 billion in contracts…

It also provides a very lucrative dividend of over 6% with a payout ratio in the high 80’s, lending to its great investment potential

And what about that huge potential in the marijuana industry?

Well, a lot of the biggest cannabis companies in Canada also trade in the U.S., such as Canopy Growth (CGC) and Aurora Cannabis (ACB).

These two companies offer the best of both worlds… cannabis exposure… but also the size and backing of a large corporation…

Both actually have ties to large mainstream companies… CGC benefits from a nearly $4 billion investment from Constellation Brands… and ACB inked a relationship with the UFC, to further enhance research into the benefits of CBD in sports and health…

While the big guys trade on both exchanges, here’s a look at a smaller company in the cannabis industry with some great prospects… traded on the Canadian OTC market…

Emerald Health Therapeutics (EMHTF) –

Emerald Health Therapeutics, Inc. is a Canadian licensed producer of cannabis products… known for medical uses.. Emerald recently introduced eight strains of dried cannabis flower for the Canadian recreational market through its 50%-owned Pure Sunfarms operation and branded products…

As you can see, there are many options to trade and invest in Canada…  and I actually trade stocks on the U.S. exchanges as well as the Toronto exchange…

So if you want to learn how to spot more opportunities than provided in the U.S. alone, I can show you how I profit from stocks in both countries…

And most of the Canadian companies I trade are also listed on the U.S. stock exchanges, so you can actually trade alongside me without the headache of finding access to the Toronto exchange or dealing with currency exchange rates…

By trading companies in both countries, I have more options for finding possible trades and have been able to consistently add to my profits… year after year…

I offer this added potential to my members and as I mentioned, trading Candian stocks can be easily done on the NYSE without having to learn new rules or systems…

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Source: PetraPicks.com | Original Link

Market internals are flaring up again…

The SPY is at a critical level… It toyed with all-time highs for a week…

I wanted to wait for a pullback before jumping in…

Well, we have the pullback… what’s next?

As we approach the start of the fourth quarter there is one thing all traders can agree on—an expected surge in market volatility and uncertainty.

After all, we still have:

• Trade deal- still up in the air
• Political turmoil with the expected announcement of a formal impeachment inquiry
• FAANG stocks are facing risks after Trump commented about China and social media platforms

All of which lends to more volatility and a plethora of opportunities to finish out the year with a bang.

At the same time… caution is required.

And timing is everything.

In my latest market update, I spell out the key levels every trader should know in the SPY. This will keep you on the right track. And help you avoid the chop.

What to Watch for Now

The story of the market…

Two weeks ago I wrote a post about support and resistance (read it here) and shared the chart of the SPY below…

The SPY created a range between support around 282 and resistance just under 295.

On the chart you see the SPY breakout point, creating a move above the resistance level of 295… and I mentioned that many times a stock breaking a major resistance level will move up to test a previous high (orange line in the chart).

So what happened next? 

After the breakout, the SPY ran up to test resistance within a few days.

Look at the updated chart of the SPY below…

You can see where it reached its all-time high (orange line) and stalled out… as expected due to the major resistance level there…

So what pushed the SPY to highs? Headlines… or a Breakout… read post here

Where are we NOW?

When a stock breaks above major resistance, the previous resistance often times becomes a new support level…

The 295 breakout point was a major resistance level and once it broke through… 295 was set up with the potential to become a new support level… yet to be determined.

As mentioned in the last market update… I didn’t expect the SPY to just rip above the highs without some resistance…

More so, I was looking for a pullback from highs, due to heavy resistance there… and then we would get a chance to see if 295 would indeed create support or not…

So here we are… we got the pullback from highs… back to the 295 level…

Now what?

Look at the updated chart below… this is the level to watch… we are at an inflection point in the 295 area…

If we get confirmation of support… I will look to the long side, as we could retest highs again…

Now on the other hand, if we see a break below, I’ll be looking to sell…

And if it does break to the downside… be careful as it could get nasty real fast… the death line is still at 282 and we could retest there, or much worse.

While it may seem a daunting task to keep up with the market… and even more daunting, trying to make sense of it.

There really is no need to worry… we have our support and resistance levels, and chart patterns that work in any market.

I have been trading for a decade and have been profitable in every market that has come my way…

How? By sticking to what works.

And what works for me is to let the charts tell the story…

I have built a system using technical analysis… finding specific chart patterns I have seen work over and over again, important levels to watch, and a few easy to read chart patterns—they’ve yet to let me down.

Best of all, my system works with any account size.

In fact, I put together a special training for those wondering how I trade different sized accounts. It’s a question I get asked a lot, and I’m happy to have put this together for you.

Watch Here

Source: PetraPicks.com | Original Link

So many of you get zoned into the minute by minute and tick by tick moves of a stock price during the day…

After all, we are day traders, right?

No matter what time frame you trade in, there is no good that ever will come from watching the tick by tick movement in a stock’s price…

One of the most important things in trading is to get rid of emotions, keep a level head, and make rational decisions…

This is hard to do when focused so intently on meaningless movement…

For me, I find it way easier to keep composure and make simple decisions on trades when I am not locked into every tick…

With technical analysis, the focus is on the charts, which are the visual result of the tick by tick when it’s all said and done…

And using charts with multiple timeframes will help take your focus away from the chaos and put it on what is… the charts…

Even with short term trading, by using longer-term charts at the same time, you can increase your odds tremendously…

This is called multiple timeframe analysis and it’s actually quite simple and often underused…

I am going to show you how to increase your odds when trading by using multi-timeframe analysis.

Why you should use Multiple Timeframe Analysis

This type of analysis is the use of charts from multiple timeframes, ex. monthly, weekly, daily and hourly…when analyzing a stock.

The best way to perform this type of analysis is with a top-down approach… meaning to look at the highest timeframe to get perspective and build down from there… till you reach the timeframe you trade in…

With longer-term trades, I look at the monthly chart for a bird’s eye view and overall trends…

Then I narrow into the weekly chart to find major support and resistance, as well as any trends.

From there I can dial it in with my daily charts… this is where I find my bread and butter trade setups…

But without looking at the multiple time frames, I could be missing some crucial information about areas of support or resistance… or the relation of the price to major moving averages on a longer timeframe…

All of which could affect the odds of my trade working…

Example of multiple timeframe analysis:

Let’s take a look at some charts for Target (TGT).

Below is the monthly… by zooming out to a monthly, I can see it from a bird’s-eye view… I see a long uptrend and more recently an ascending triangle…

This is bullish price action… so when looking for my buy setup on a lower time frame, I will want to see it coincide with an upward breakout from the triangle.

Moving on to the weekly chart… I can see we are in an ascending channel to the upside… another positive pattern…

Now to my setup on the daily chart… from the other charts… I know that I have bullish patterns on all timeframes… so I should be looking at buy setups…

I also know that I need a break above the ascending triangle before I want to buy…

This allows me to set my trade up properly… I wait for a break above the key levels on the monthly, weekly and daily…

Once that happens, I know there is nothing in the way of the price…

I use this in all of my trades and teach my members the importance and usefulness as well…

“You have helped me find a plan that works for me by teaching me to look for set-ups across 3 time frames. That has been an amazing edge in my strategy. I never dreamed I would have the calm confidence I have today. I am cured of FOMO & 20/20 hindsight. I haven’t said “darn it, I should have _____” in a couple of months now. That’s huge!” —E.B.

If your trading profits are lagging… it’s time to learn from an experienced and profitable trader… systems, setups, indicators, live training, resources, watchlists, trade alerts and more… all from a seasoned vet with more than $2.4 million in trading profits…

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Source: PetraPicks.com | Original Link